Test Prep 1

Test Prep 1 - T EST PREP 1 1. Which of the following...

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TEST PREP 1 1. Which of the following financial structures poses the greatest risk? Operating Liabilities Debt Equity a. 30% 30% 40% b. 20% 60% 20% c. 10% 40% 50% d. 20% 50% 30% e. 10% 20% 70% 2. Which of the following partial cost structures suggests a company with the highest price markup on its merchandise? Cost of Goods Sold Depreciation Expense a. 60% 6% 25% b. 50% 5% 25% c. 65% 6% 15% d. 55% 5% 15% e. 70% 4% 20% 3. If a company pays rent for some office space before the period in which it will be used, what before-tax impact will that have on the company’s income statement? Gross Income Operating Income Net Income a. Decrease Decrease Decrease b. Stays the same Decrease Decrease c. Stays the same Stays the same Decrease d. Decrease Stays the same Decrease e. Stays the same Stays the same Stays the same 4. If a company sells inventory for a profit, but the customer will not pay for it until the next period, what before-tax impact will that have on the company’s income statement? Gross Income
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Test Prep 1 - T EST PREP 1 1. Which of the following...

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